- FTSE 100 closes 9 points lower
- House prices fall for fourth month in a row - Halifax
- Superdry agrees additional funding with Hilco
4:30pm: FTSE finishes Monday’s session slightly lower
The FTSE 100 closed Monday’s trading nine points lower, down 0.13% at 7,554.
3.58pm: Tesla CFO to step down
Tesla’s chief financial officer Zachary Kirkhorn has stepped down after 13 years at the company in what appears a surprise move.
Chief accounting officer Vaibhav Taneja has taken over the role Friday in addition to his current duties, Tesla revealed in a statement.
Kirkhorn, who has been the finance chief for the past four years, will continue to serve the company through the end of the year “to support a seamless transition”.
Tesla shares moved lower on the news, down 2.0%, to $248.93.
3.35pm: BoE under pressure to delay bank capital rules until mid-2025
The Bank of England is coming under pressure from the finance industry to delay the UK’s adoption of new global banking capital rules by six months to avoid a period of regulatory divergence that would affect the City’s ability to compete with Wall Street, the Financial Times reports.
The Prudential Regulation Authority, the central bank’s regulatory arm, last year set out plans to introduce the package, dubbed the “endgame” of the post-crisis Basel capital rules, from January 2025.
The EU intends to launch it at the same time. But last month the US surprised other major financial centres by announcing a June 2025 implementation date for the so-called Basel IV measures, which will ultimately increase US bank capital requirements by about 16%.
UK-based finance executives have warned that it would be costly to run different regimes in different countries and voiced concerns about competitiveness, particularly in global markets where banks trading in London are often vying with banks trading in New York.
3.19pm: Deutsche favous Aviva, trims life insurer price targets
Deutsche Bank has lowered price targets for a number of UK life insurers ahead of first half results which will be reported under news IFRS 17 rules.
The revised targets are as follows: Aviva PLC (buy) from 560p to 475p, Legal & General (hold), target from 290p to 275p, M&G PLC (LSE:MNG) (hold), target from 230p to 220p and Phoenix Group Holdings (hold) target from 720p to 680p.
Analyst Rhea Shah believes first-half earnings should be relatively resilient given high contractual service margin.releases after elevated new business growth.
However, despite strong bulk purchase annuitty volumes across the market and relatively robust solvency ratios, UK Life Insurers have underperformed the market, in Shah's view because of the new IFRS 17 disclosures, along with the wait for updates on strategy and capital management for most companies.
Deutsche continues to like Aviva (buy) due to its 14% free cash flow yield, the majority of which "can be returned to shareholders."
2.42pm: Wall Street opens higher
A positive start on Wall Street has helped keep London's blue chips well off earlier lows.
US markets have made a bright start on hopes of an economic soft landing despite a leading Federal Reserve official hinting further interest rate rises may be on the way.
Shortly after the opening bell Dow Jones Industrial Average was up 196.80, 0.6%, at 35,262.42, the S&P 500 was up 24.54 points, 0.6%, at 4,502.57 and Nasdaq Composite was up 52.34 points, 0.4%, at 13,961.58.
On Friday, JPMorgan's chief economist said the bank is no longer forecasting a US recession this year and raised its economic growth estimate as the economy expands at a "healthy pace."
The firm increased its current-quarter real annualized GDP growth estimate to 2.5% from 0.5%.
"Given this growth, we doubt the economy will quickly lose enough momentum to slip into a mild contraction as early as next quarter, as we had previously projected," the economist wrote.
The Campbell Soup Company has announced its acquisition of Sovos Brands, the parent company of Michael Angelo's and Rao's foods, soups and sauces lines, in a cash deal of $2.33 billion.
This acquisition, priced at $23 per Sovos share, represents a 28% premium on Sovos' recent closing price.
Following the announcement, Sovos' stock surged by 24.7% in early trading, while Campbell's shares dipped 2.1%.
But Tyson Foods shares tumbled 9.8% to $51.50 after it reported third-quarter revenue and earnings that fell short of expectations due to slowing demand for its beef products and weaker pricing for pork and chicken.
The Warner Bros. Discovery shares climbed 0.9% on reports its smash hit “Barbie” was set to top $1 billion at the global box office, according to studio estimates. Totals will come out today.
2.11pm: Superdry pays hefty price for extra funding
Superdry PLC (LSE:SDRY) has agreed a secondary lending facility of up to £25 million with Hilco Capital Ltd but has paid a hefty price for the extra funding.
The branded retailer, famous for its hoodies, will pay interest of 10.5% above base rate on the drawn element of the borrowing which has been put in place for a 12-month term.
Superdry said it would provide improved liquidity to help accelerate the implementation of the turnaround plan and cost reduction programme.
It is in addition to the existing asset backed lending facility with Bantry Bay Capital Ltd and will help mitigate the headroom cap on this outstanding credit agreement.
The City was seemingly unimpressed by the news marking the shares down 4.7% at 71.30p.
1.00pm: Futures point to bright start across the pond
US stocks are expected to start the week on the front foot ahead of a week which sees inflation figures for July released.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.1% higher, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were up 0.4%.
The future path of interest rates will once again be at the forefront of investor’s minds ahead of the CPI print on Thursday and as a leading Federal Reserve official suggested there may be more hikes to come.
"Officials at the Federal Reserve are suggesting they are not yet done in their battle with rising prices. Having been slow to respond to what they believed was transient inflation in 2021, it seems central banks like the Fed are in no mood to be complacent," said AJ Bell investment director Russ Mould.
Federal Reserve Governor Michelle Bowman said on Saturday that more interest rate hikes "will likely be needed" to bring inflation down further.
Bowman said she supported the policy-setting Federal Open Market Committee's decision for a rate hike in July given "strong economic data and still elevated inflation."
"I also expect that additional rate increases will likely be needed to get inflation on a path down to the FOMC's two percent target," she added in her remarks.
Her remarks came after a mixed employment report on Friday showing that hiring in the US has slowed but wage gains remained robust.
The data dependent Fed will now be eyeing Thursday’s inflation report although headline inflation is expected to tick higher after June’s data came in below forecast
Joshua Mahony at Scope Markets pointed out markets “are pricing a 40% chance of another 2023 hike, with the latest US CPI figure key to determining whether that will become a more prominent or marginal view at the Fed.”
The consumer price index rose 3.0% on an annual basis in June, cooling from a 4.0% rise in May. It was the smallest 12-month increase since March 2021. Core inflation - which excludes items such as food and energy - was 4.8% in June, down from 5.3% in May.
According to FXStreet consensus, markets are expecting a 3.3% annual rise in CPI in July. Core inflation, however, is meant to cool slightly to a 4.7% rise
The earnings season dials down after a frantic two weeks but numbers will be released from Eli Lilly, Walt Disney, and Alibaba later this week.
12.34pm: BP mulls subsidy-free wind farm plan
BP is considering building two huge offshore wind farms in British waters without government subsidy contracts in what would be a first for the sector, according to The Times.
Bernard Looney, the energy group’s chief executive, said it could start building the Morgan and Mona projects in the Irish Sea as soon as “late next year” and may not seek contracts from the government to guarantee their revenues.
The wind farms together would boast up to 214 turbines about 20 miles off the coasts of north Wales and northwest England and could power 3.4 million homes.
Every big wind farm in UK waters to date has been built with some form of subsidy scheme, with projects in recent years supported by “contracts for difference”, awarded through government auctions.
The contracts guarantee that consumers pay a fixed price for electricity from the wind farms, topping up market prices with subsidies when required and offering valuable revenue certainty to developers.
12.10pm: Business confidence falls on macro nerves
Business confidence fell last month amid jitters over the slowing UK economy dampening company plans to hire more staff, according to a survey of more than 4,000 firms.
Optimism has declined, with higher interest rates and weak global demand contributing to gloom across the services and manufacturing sectors.
UK Business Confidence slides and hiring falls, says BDO surveyhttps://t.co/tnuB5CWTbi
— Business Matters (@BizMattersmag) August 7, 2023
The latest Business Trends report from accounting firm BDO showed that employers’ hiring intentions have dropped for the first time in six months.
It also showed manufacturing output fell to its lowest point since the early days of the UK Covid-19 lockdown, in May 2020, with continuing supply difficulties taking a toll.
Back in the markets and the FTSE 100 is close to session lows, down 46.12 at 7,518.25.
11.39am: Rising costs of chips could hit use of AI
The soaring cost of powering generative artificial intelligence could stifle its growth, according to Lidiane Jones, the new chief executive of Slack, the messaging business.
As demand for the technology expands exponentially, so too has the need for chips that are powerful enough to run it, known as graphics processing units (GPUs).
This has led to a shortage in supply of these specialised components, which in turn has pushed up costs for customers and is proving a major concern for technology companies.
In an interview with The Times, Jones said she was spending a lot of time thinking about this issue. “Will that limit how much customers will be able to adopt? And how do we ensure that the cost of these capabilities are not so prohibitive that organisations will limit their use?”
She added: “That is something that I think the market will have to watch really carefully because it could slow down the adoption of spending [on generative AI] and how constrained we get across the globe.”
11.18am: UBS to cut two-thirds of Credit Suisse bankers in Asia - report
UBS is weighing a plan to cut about two-thirds of Credit Suisse's investment bankers in Asia-Pacific, Bloomberg reported citing people familiar with the matter.
The job cuts, aound 200, would be the first in the region following the fored marriage between the two Swiss lenders.
Reuters had earlier reported UBS is letting go of about 80% of Credit Suisse investment bankers in Hong Kong starting this week.
UBS wants to retain more than 100 Credit Suisse investment bankers across Asia, with many of them focusing on markets outside of Hong Kong, Bloomberg said.
10.41am: Inflexion a possible buyer for Haleon's Nicotinell arm
Haleon’s anti-smoking business Nicotinell has attracted the attention of a leading private equity investor, according to reports.
Sky News reported Inflexion, which has backed companies such as Goals Soccer (AIM:GOAL) Centres and Mountain Warehouse, is in talks about buying the brand which the FTSE 100 listed firm has earmarked for sale.
The report said Inflexion was one of group of bidders looking at the unit at price substantially less than touted $800 million price tag mooted in a report about the prospective sale last month.
Haleon, which was spun out of GlaxoSmithKline, the pharmaceuticals giant, last year, owns some of the world's leading consumer healthcare products.
Its chief executive, Brian McNamara, wants to sell non-core brands in order to drive a more focused portfolio and pay down debt.
9.59am: German industrial production slumps in June
Adding to the downbeat mood German industrial production fell 1.5% in June from the previous month, reflecting declines in construction and car manufacturing output, and worse than market expectations od 0.4% drop.
There was a rebound in new orders for German industry, which rose 7% in June from May.
But this was mainly due to a big order for Airbus and surveys are pointing to further declines in demand and output in the third quarter.
Carsten Brzeski at ING warned June’s decline in industrial production may have been enough to keep Germany in recession, which is defined as two straight quarters of economic decline.
He said: “A further drop in German industrial production in June is another illustration of the country’s ongoing stagnation.
“With today’s numbers, the risk has increased that the flash estimate of stagnating GDP growth in the second quarter could still be revised downwards.”
The Dax fell on the news down 58 points at 15,894. Elsewhere in Europe, the Cac 40 is down 30 points at 7,285.
9.41am: FTSE extends falls but Rolls-Royce lifted by upgrade
Blue chips are at session lows as investors "react to the potential for further rate hikes in the US," notes AJ Bell's Russ Mould.
“Officials at the Federal Reserve are suggesting they are not yet done in their battle with rising prices. Having been slow to respond to what they believed was transient inflation in 2021, it seems central banks like the Fed are in no mood to be complacent," he said.
Mould was referring to a speech by Fed official Michelle Bowman who said on Saturday that more interest rate hikes "will likely be needed" to bring inflation down further.
Bucking the weaker trend is Rolls-Royce Holdings PLC (LSE:RR.), up 1.7% to 210p after JP Morgan upgraded to neutral from underweight and hiked its price target to 235p from 90p..
9.13am: Permanent hirings at three year low, profits drop at PageGroup
The jobs market is in the news with PageGroup PLC (LSE:PAGE) reporting half-year results and industry body, the Recruitment and Employment Confederation’s (REC) monthly survey out today.
The REC’s report, published in collaboration with KPMG, showed permanent placements contracted at the quickest rate for just over three years, while temp billings growth weakened notably from June.
Vacancy growth hit a 29-month low and the availability of staff rose at a substantial pace, the report said.
But there were encouraging signs for the Bank of England with pay pressures moderating again in July. Vacancy growth meanwhile slowed further, hitting a
29-month low in July.
Claire Warnes at KPMG UK, said: “The latest survey results reflect the current Summer weather – damp, but with some possible bright skies on the horizon.”
Over at PageGroup, the international recruiter shrugged off a profit slump and slowdown in white-collar recruitment to announce a £50 million special dividend with its interim results.
The firm, which also cut its own headcount by 5%, said that its first-half performance had been robust with revenues at £1.03 billion, up 5.8%, even though profits dropped 44% to £63.3 million.
PageGroup shares are little changed.
8.48am: FTSE 100 lower, Unite hit by downgrade
The FTSE 100 remains in the red, down 18 points 7,546, in a steady start to the week.
Matt Britzman, equity analyst at Hargreaves Lansdown said it reflected "an element of caution ahead of a week of further earnings reports."
The banking sector is preventing further losses with Lloyds Banking Group PLC (LSE:LLOY), HSBC Holdings PLC (LSE:HSBA), Barclays PLC (LSE:BARC) and NatWest Group PLC (LSE:NWG) all higher.
But top of the fallers is Unite Group PLC (LSE:UTG) after RBC downgraded to sector perform from outperform with a 1,100p price target.
Not a good day for investors in Christie Group PLC.
Shares have tumbled 19% after the firm warned full year performance would be "materially below previous expectations."
This follows continued delays in achieving contractual exchange on ongoing transactions in its agency and advisory business, Christie & Co, and alterations to the expected timing and outcome of certain significant portfolio assignments, it said.
PageGroup PLC (LSE:PAGE) is also lower, down 1.2%, after it reported a 45% fall in pre-tax profit to £63.3 million although revenue rose 5.8% to £1.03 billion.
8.15am: FTSE 100 eases but Card Factory (LSE:CARD) in the green
The FTSE 100 has posted modest losses at the open in a cautious start to the week likely to be dominated by US inflation figures on Thursday.
At 8.15am, London’s premier index was down 15.00 points, 0.2%, at 7,549.37 while the FTSE 250 was 43.27 points, 0.2%, at 18,891.35.
There was another health check on the UK's housing market with house prices dropping again in July, according to Halifax, as rising interest rates bite.
The lender's monthly house price index showed that the average house price dropped by 2.4% on an annual basis in July, a pick-up compared with June, when prices fell by 2.6%.
On a monthly basis, prices eased 0.3%, the fourth consecutive monthly fall.
The EY ITEM Club noted “house prices are likely to continue heading down, albeit more in the form of a slow puncture than a serious correction.”
“Although mortgage rates have started falling from their recent highs, they are likely to remain above where they were just a couple of months ago,” the economic forecaster said.
In company news, Card Factory (LSE:CARD) PLC jumped 13% after reporting trading was materially ahead of expectations.
Analysts at Liberum noted this was the fourth material upgrade to guidance that the firm has delivered since November 2022.
“Yet another upgrade underscores our confidence that there is much more to come with the business now on a firm footing,” it added.
Clarkson PLC (LSE:CKN) eased though despite a solid increase in revenue and profits in the first half.
Peel Hunt said the results were “ahead of our expectations.”
“The main outperformance came from the Broking division, where revenue grew 22% to £257.2 million and operating profit 24% to £58.2 million,” the broker added.
7.55am: House prices fall again in July - Halifax
UK house prices dropped again last month, according to Halifax, hit by rising interest rates.
Its monthly house price index showed that the average house price dropped by 2.4% on an annual basis in July, a pick-up compared with June, when prices fell by 2.6%.
On a monthly basis, prices eased 0.3%, the fourth consecutive monthly fall.
But Kim Kinnaird, director, Halifax Mortgages, said the small falls add “to the sense of a housing market which continues to display a degree of resilience in the face of tough economic headwinds.”
She added that, in particular, “we’re seeing activity amongst first-time buyers hold up relatively well.”
“In reality, prices are little changed over the last six months, with the typical property now costing £285,044, compared to £285,660 in February. The pace of annual decline also slowed to -2.4% in July, versus -2.6% in June.”
Last week, Nationwide said, in its monthly health check of the property sector, that average house prices fell by 3.8% year-on-year in July, the biggest drop since the aftermath of the financial crisis.
7.44am: Clarkson profits jump but rates softening
Clarkson PLC (LSE:CKN) reported strong growth in revenue and profit at the half-way stage but cautioned it was started to see some softening of rates in sector.
The London-based provider of shipbroking and investment banking services posted revenue of £321.1 million, up 20% from £266.7 million a year ago while statutory pre-tax profit jumped 24% to £52.2 million from £42.0 million.
Laurence Hollingworth, chair said it had delivered “another outstanding performance in terms of revenue and profits.”
Clarkson said its Broking team remains the biggest driver to profit with profit rising to £58.2 million from £47.0 million reflecting a margin of 22.6%, up from 22.3%.
EPS climbed to 130.5p from 98.5p while the dividend was increased to 30p from 29p, the 21st consecutive increase in the payout.
Despite highlighting some softening in rates, the firm baked full-year guidance with continued confidence in the medium-term outlook.
7.25am: Card Factory (LSE:CARD) trading "materially" ahead of expectations
We kick off the week with upbeat news from Card Factory (LSE:CARD) PLC which reported buoyant trading in the first six months of the year despite an uncertain macro backdrop.
The greeting cards, gifts and celebration essentials retailer said trading to July 31 was "materially" ahead of the board's expectations.
The macro backdrop continues to be uncertain, and there is still much to be delivered over the remainder of the year, the firm added.
"Nevertheless, given the strength of the performance in the first half, together with our current outlook for the second half, the board now expects the full year outturn to be materially ahead of its' previous expectations," it added in a statement.
7.00am: FTSE 100 awaits fresh spark, called lower
The FTSE 100 is expected to start the week on the back foot after falls on Wall Street on Friday and a mixed session in Asia.
Spread betting companies are calling London’s lead index down by around 19 points after closing up 35.21 points at 7,564.37 on Friday.
It’s another busy week of corporate news although Monday’s corporate diary is relatively thin with results from recruiter, PageGroup due. House prices figures from Halifax will also be released.
Hope that US interest rates may have peaked were dashed after a US central bank official, Michelle Bowman, said on Saturday that more interest rate hikes "will likely be needed" to bring inflation down further, shortly after policymakers lifted rates to the highest level since 2001.
In the US on Friday, markets conceded early gains to close lower. The Dow Jones Industrial Average and the Nasdaq Composite were both down 0.4%. The S&P 500 was down 0.5%.
In Asia on Monday, markets were mixed. The Nikkei 225 index in Tokyo was up 0.1%. In China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 0.3%.